Cerberus to raise Seibu stake to over one-third

U.S. investment firm Cerberus Capital Management LP is preparing to raise its stake in Seibu Holdings Inc. to more than a third to tighten its grip on the railway and hotel operator, sources said.

Cerberus plans to increase its holding in Seibu Holdings to 33.4 from 32.4 percent, giving it power to veto major board proposals at shareholders meetings.

The move comes amid a rift between the two parties over Seibu Holdings’ plan to relist on the Tokyo Stock Exchange at the earliest possible time. A formerly listed core entity of the group, Seibu Railway Co., was delisted in 2004 over a financial misstatement.

Cerberus and Seibu are at odds over the offering price, with Cerberus seeking a price that would ensure a level of returns the investment firm views as adequate, the sources said.

Cerberus is expected to urge other Seibu shareholders to sell their shares to the U.S. firm.

The move could potentially lead to a hostile takeover if the Seibu Holdings board does not agree to the Cerberus proposals.

Seibu Holdings was set up after the delisting of the railway. The holding company of Seibu Railway, Prince Hotels Inc. and the Seibu Lions baseball team reported a group net profit of ¥8.4 billion for fiscal 2011 on revenue of ¥438.3 billion.